Joseph & Jordan, a consulting firm, specializes in providing internal audit services for its clients. It bills the clients $159 per hour for its professional services; it costs the firm $84 per hour to cover the cost of its staff. To cover its MOH costs, the partners have always applied MOH costs to clients based on total direct labor hours. At the beginning of the year, they budgeted for 8,400 direct labor hours and $158,760 of MOH costs. In the current year, the firm's professional staff worked on three key client projects: All Ways, Inc., for 2,900 hours; My Way, Inc., for 2,400 hours; and High Way, Inc., for 4,600 hours. These clients were billed for this work by the end of the year. Naturally, there were other costs incurred to run the firm, including sales and marketing costs, which added up to $129,000 this year. Actual MOH costs for the year totaled $139,000.

Joseph & Jordan, a consulting firm, specializes in providing internal audit services for its clients. It bills the clients $159 per hour for its professional services; it costs the firm $84 per hour to cover the cost of its staff. To cover its MOH costs, the partners have always applied MOH costs to clients based on total direct labor hours. At the beginning of the year, they budgeted for 8,400 direct labor hours and $158,760 of MOH costs. In the current year, the firm's professional staff worked on three key client projects: All Ways, Inc., for 2,900 hours; My Way, Inc., for 2,400 hours; and High Way, Inc., for 4,600 hours. These clients were billed for this work by the end of the year. Naturally, there were other costs incurred to run the firm, including sales and marketing costs, which added up to $129,000 this year. Actual MOH costs for the year totaled $139,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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Joseph & Jordan, a consulting firm, specializes in providing internal audit services for its clients. It bills the clients $159 per hour for its
professional services; it costs the firm $84 per hour to cover the cost of its staff. To cover its MOH costs, the partners have always
applied MOH costs to clients based on total direct labor hours. At the beginning of the year, they budgeted for 8,400 direct labor
hours and $158,760 of MOH costs.
In the current year, the firm's professional staff worked on three key client projects: All Ways, Inc., for 2,900 hours; My Way, Inc., for
2,400 hours; and High Way, Inc., for 4,600 hours. These clients were billed for this work by the end of the year.
Naturally, there were other costs incurred to run the firm, including sales and marketing costs, which added up to $129,000 this year.
Actual MOH costs for the year totaled $139,000.

Show the effects of the labor and MOH costs through T-accounts for the company's inventory and Cost of Sales accounts. (For
balances beginning/ending in O select "Beg. Bal." and "End Bal." for the date and O for the amounts for the balance of the account.)
WIP Inventory
FG Inventory
✓

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Determine the gross margin percentage and the profit margin percentage. (Round answers to 2 decimal places, e.g. 52.75%.)
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Profit margin percentage
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